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Comment by dcurtis | Hacker News Reader

"Cash – As of September 30, 2011, cash, cash equivalents, and short-term marketable securities were $42.6 billion."

During this quarter, Google made $302 million on interest alone. That's an impressive 11% of this quarter's net profit. I wonder what they plan to do with all that money.

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Buy patents apparently :-) More seriously, I asked once about this when they were removing bottled water from the local mini-kitchens and dropping over 1 billion dollars a quarter into the bank. My question was "Gee, can't you spare a couple of million this quarter to keep the bottled water restocked?" and obviously the answer was that they could not.

But from a corporate/strategic point of view having a lot of cash on hand makes executives more aggressive and that can be a good thing for the company. Just like employee's that are too afraid to lose their job to say what they really need to say, executives who are too afraid that their next decision could doom the company won't take those risks.

Like anything there is a balance.

Removing bottled water is not a financial decision, but an environmental one. Every new employee is given a water bottle they can fill with water an infinite number of times.

If they took away bottled water, I'm sure they replaced them with fruit juice, organic teas and all sorts of ambrosia.

I should have noted that the bottled water 'discussion' at Google was long and heated and what Googler's would call a multi-centa-thread [1]. There were folks who shared the position stated above that it was environmentally 'better' to not have bottled water in the mini-kitchens. And there were folks of a more empiricist frame of mind who analyzed data and came to an alternative conclusions. Understand the company is very data driven.

Watching it unfold was educational on so many levels.

[1] A 'Centa-thread' being an email discussion that gets to 100 replies where Gmail would fork it and start new conversation.

Interesting, since I've never got to a 100 reply email I've not seen this.

So, they replaced the plastic bottle of water with a plastic bottle of flavored water-like beverage. Sounds like an environmental win to me.

They replaced bottled water with a water dispenser that dispenses ambient, cold, and sparkling water. Many engineers still choose to drink ordinary water even with all the flavored options.

Glad that they took away the bottled water. It is still H20 from the water fountain.

Bottled water is a scam. Most of the stuff comes from water hoses. I'm sure the stuff they had at google was laced with tasty minerals and went through purification processes. There is so much plastic that ends up in the ocean/street because of bottled water. Its really a shame.

Yes and no. My understanding that most bottled water is re-packaged tap water which is sold at a markup. A number of people miss the functional aspect of bottled water which is that you are going from point a to point b and you want to drink something on the way.

As it turns out, the data collected supported the hypothesis that a significant fraction of the bottled water drinkers were of this category (not drinking it because it was 'better' but drinking it because it was water convieniently packaged for transport in a single serving). The result was that removing bottled water simply lead to substitution of other beverages which were not 'water' but were convieniently packaged.

A lot of folks suggested carrying around a drinking bottle or mug so that you could refill it at various points. And, giving free water bottles to people, that did meet some of the need (not sure how widely that program was tried).

A proposed solution that was never even tried was to have Google bottle its own water on site (very eco, very doable) and stock that. This would have satisfied just about everyone except it didn't pass the 'saves money' test, which was, ultimately the basis for all of the changes.

And it is always the responsibility of management to manage their costs effectively. Generally the debate was around the true cost vs the ledger (dollars and cents) effect.

They basically proved that our benefits were their safety cushion. The water bottles were only one example. Remember when they changed the shuttles and screwed a bunch of people's schedules until the backlash forced yet another recalculation?

Oh absolutely, at some level 'quality of life' benefits always have the property that if you are in danger of not making your numbers for wallstreet you can quickly shut them down, just giving an internal measure of control over one part of the profit/loss statistics.

Am I missing something? $302 million on $42 billion is <1% return.

For the quarter, which would be over 3% for the year. Which doesn't seem to bad if your not putting your money into overly risky things. Treasury bonds may be yielding less?

You're right: The long bond is less, so what are they invested in? "Marketable securities" with 3% yield means that they have something not AAA (which probably makes sense on such a large cash hoard) but there will come a day when interest rates go up. That will cause the value of their bonds to drop substantially.

Hell, I'd like 3% on my money.

Looks like we have it easy in Australia http://www.commbank.com.au/personal/accounts/savings-account...

Up until a couple of weeks ago -- stocking $USD in $AUD would have had some great retuns.

But Forex risk is real - and should not be discounted.

Get a rewards checking account: http://www.fatwallet.com/forums/finance/775437/

True. But consider Google's effective inflation rate. A lot of things they care about - say, Palo Alto real estate - are getting more expensive faster than 3 percent. That money is losing value. Spending on acquisitions or otherwise investing in the business should yield a far better return.

If the right acquisitions present themselves, they already do a lot and at their level there just aren't as many easy win companies to acquire. I think if I was an investor I rather them lose a little bit of opportunity on their pile of cash than say drop $10 billion onto something like groupon.

Am I missing something? $302 million on $42 billion is <1% return.

Yeah, net profit was 2.73 billion, 302 million of which was made on interest. $42 billion is total cash on hand.

Why would this comment be downvoted? He's pointing out the interest is not all that impressive and if that's 11% of profit then the results are probably even less impressive then claimed.

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